CIBIL Score has become quite important in the last one decade with almost every financial institution considering CIBIL scores before approving loans for any applicant. When it comes to talks about improving CIBIL, many people and private consultants often promise courses and other suggestion on how to improve CIBIL scores, which is seldom helpful.
However, the fact is, there is no specific mantra to improve your CIBIL score. You just need to keep certain things in mind and the scores would improve automatically. It is more about discipline and organization of your finances. Here are few tips that would help you improve you CIBIL score subsequently.
Please follow these steps to improve your CIBIL score
1) Make payments before time
If you talk about a self help to improve your CIBIL score, we would simply suggest you to make all your payments on time or even before time. Plan your expenses and finance in such a way that your expenses are not greater than your earnings.
Moreover, if you have loans to pay, it is always better to have ECS facility activated so that the payments are automatically withdrawn from your account without delay. In this case, you simply need to maintain the required balance in that particular account.
If you are making payments through cheque, it is always safer to drop the cheque much before time, say 10 days in advance. Prepare an excel file of all the payments you have to make in a particular month and stick to that chart. Or you can also set reminders on your phone to know the dates of payment well in advance.
2) Avoid Credit Hungry Attitude to improve your CIBIL score
Having credit cards is both a good sign as well as a bad sign for a person. The point here is how your credit history is perceived in regards to having credit cards. For example, if you have more than 5 credit cards in your name and keep missing payments, it is certainly a reason for bad CIBIL score. On the contrary if you have just one credit card in your name and you are bang on payments, your credit score is intact.
Too many credit cards mean the probability of missing on payments is high. Untimely payment or payment dispute is certainly a concern in terms of bad credit score. If you have many credit cards, it also shows that you are hungry for credit and financially unstable. Believe us, this would impact your CIBIL scores too.
Not just credit cards, any kind of micro credit in too many numbers is considered to be perceived as a credit hungry behavior.
3) Credit cards are for responsible people
Ever since credit cards came to India, it has been more misused than used by the common population. However, credit cards are meant for responsible people and not for spendthrifts, unless you are a multi-billionaire who doesn’t care about throwing away money anywhere.
If you really want to keep your CIBIL score in check, start using credit card responsibly. By saying that we mean, that buy with credit card for only things that are necessary. Keep your credit card for emergency only. And once used, keep a track of payment cycle and pay on time.
As a matter of fact, if you are using more than 30 to 40 per cent of credit limit every month, it would surely impact your credit scores. If 40% of credit limit is not sufficient for you, apply for a new card instead of using more credit with the same card.
One another mistake that people often commit is opting for settlement in cases of disputes. Please mind that any settlement in credit card is considered as a negative score in CIBIL. If you have a dispute, rather go for banking ombudsman or pay 100% of the outstanding amount.
4) Understanding the difference between secured and unsecured loans improve your CIBIL score
If you have secured loans like home loans against you, it would serve as a positive score in your CIBIL. However, if you have unsecured loans like personal loans, it could bring negative impact to your scores. To improve your CIBIL ranking, avoid unsecured loans until it is an emergency.
5) What matters at the end is YOUR CREDIBILITY
Credibility comes from consistency and in turn improves your CIBIL score. If you are serious about improving your CIBIL score, all you need to do is keep a check of your overall money and credit management.
Do opt for loans, unless too necessary. And if there are secured and unsecured loans against your name, make sure you make the payments on time. Stay away from disputes as much as possible. If improving your CIBIL scores would be in the back of your mind every time you want to use your credit eligibility, you would certainly be responsible in managing your credit health, which in turn would improve you CIBIL score.
A Small table that you should remember to improve your CIBIL score
|Things to follow that will improve your CIBIL Score|
|1||Make payments before time|
|2||Avoid Credit Hungry Attitude|
|3||Credit cards are for responsible people|
|4||Understanding the difference between secured and unsecured loans|
|5||What matters at the end is YOUR CREDIBILITY|